How Search Engine Advertising (Google AdWords) Works

Search engine advertising platforms like Google AdWords and Bing Ads show targeted ads to people when they search on specific terms with the goal of earning a conversion for your business.

For example if a pipe bursts in my house at 11:30 on a Saturday night, I might search on the phrase “emergency plumbers phila” and I might see the ads highlighted below.

Clicking on an ad will take me to a web page which describes the company’s emergency services and displays the phone number to call. The plumbing company hopes I call that number.

Google AdWords and Bing Ads are often called “pay per click” advertising because you only pay when a person responds to your ad by clicking on it. Simply showing the person the ad is typically free.

These ads are powerful because you can closely match people’s interests with your products and services and you know these people are interested right now (because they just searched on keywords relevant to your company).

Pay-per-click advertising is in many ways the same as search engine optimization, the topic we discussed in our previous email. The goals are largely the same. And businesses that have an active SEO strategy typically have active AdWords and Bing Ads campaigns as well. Let’s start with the similarities.

Ways Search Engine Advertising and SEO Are Similar

In both search advertising and SEO, you want your content to rank well in search results for keywords and phrases that are valuable to your business. With SEO, the content you are ranking are pages on your website. With pay-per-click, the content you are ranking are ads on the search results page (which when clicked lead to pages on your website).

Both search advertising and search engine optimization have an “earned relevance” factor. Just like search engines want to show you relevant and useful content in their “free” search results, they also want to show you relevant and useful results in their paid search ads. That’s because if people don’t find the ads relevant and useful, they’ll stop clicking on them.

So with pay-per-click advertising, the search engines will show ads they think are more relevant to their users more often – and charge you less to show them – than ads they think are less relevant.

Ways Search Engine Advertising and SEO Are Different

One major difference between search advertising like AdWords and search engine optimization is speed. With pay-per-click, you can start getting results instantaneously because you are paying to appear on the first page of search results. With SEO, it will take time to get results because you have to earn your way on to the first page by convincing the search engines you deserve to be there.

Another difference is persistence. The moment you stop spending money on search advertising, your ads disappear. By contrast, once one of your pages ranks well in the search engines for a keyword, it may well continue ranking for some time.

A third difference is power and scale. With AdWords and Bing Ads, you can advertise on hundreds of keywords. You can test 10 or 20 or even more difference advertising messages. You can test different sales messages on different landing pages to see which ones convert the best. And you can track costs and profits down to the penny.

With SEO, each keyword you want to target needs its own web page. So if you wanted to target hundreds of keywords with search engine optimization, you would need hundreds of pages on your website. This is much easier for large businesses to do than small ones. And testing different sales messages is a slower and more cumbersome process.

Should You Spend Money on Search Engine Advertising?

The answer to this question is similar to the answer for search engine optimization. For pay-per-click advertising like AdWords and Bing Ads, you need to calculate an estimated return on investment based on five factors:

1. How many searches there are on your keywords.

2. How many web visits (or “clicks”) you can get from these searches.

3. How much each click costs.

4. How many website visits you need to earn one conversion.

5. The average value of these conversions.

Making this estimate takes research and analysis. In general, I find it worthwhile to do this analysis when your products and services have the following characteristics. (1) You sell a well defined, easy to understand product or service with an easy to understand price. (2) The buying decision is fast and simple. (3) It’s a low-risk decision. (4) You can use sales and special offers to motivate people to take action.

So this is a great advertising model for retail consumer products and simple business-to-business products. It is also good for many kinds of simpler consumer and business-to-business services.

Pay-per-click can also be good for more complex products and services as long as you use it to generate sales leads rather than sales. In these cases, you need a free, no-obligation estimate or proposal or consultation or white paper or glossy informational brochure to be your conversion.